| GETTING STARTED
Q. Why is the purchase or sale of a home more complicated than buying
or selling some other object, such as an expensive car?
A. Taxes, financing considerations, and other factors affect
the transactions involving such items
as cars and boats. Under the law, however, these items are considered
personal property as
distinguished from real estate, also known as real property. Personal
property and real estate have different characteristics and, as a general
rule, the law treats each type of property differently.
Personal property is usually easily moved and, in many cases, is owned
for a relatively
short period of time. Possession of personal property also is a strong
indicator of ownership. With real estate, on the other hand, the property
cannot be moved and possession does not necessarily mean ownership. To
illustrate, unless property is fenced in, it may be difficult to distinguish
a neighbor's property from your own. And, while you may own real estate,
you may not have possession of it, if, for example, you are renting the
property to someone else.
Other factors that distinguish real estate from personal property are:
many different
people can have an interest in the same real property; foreclosing on
real property is much more difficult than repossessing a car; and real
estate is taxed differently than personal property.
Q. What is a home?
A. A home is more than a single-family dwelling built on an individual
parcel of land.
Townhouses, condominiums, and cooperatives are also homes. Each one of
these types of homes has unique features, which are discussed later in
this section.
Q. Why should I buy a home?
A. Most people buy a home because they want to own it and, thus,
reduce their living costs as they get older. Other benefits include favorable
tax considerations and more control over one's personal living environment
than might be possible in the context of renting.
A common view of prospective homebuyers is to think of a home solely or,
at least,
primarily as an investment. This view, however, may be mistaken. There
is no reason to assume
that home prices will always rise. Home prices can fall, sometimes dramatically.
And, depending on the home prices in your area of the country, renting
may be far more economical than buying, particularly if the renter invests
the difference between a mortgage payment and rental payment.
Nonetheless, while the decision to buy a home is not just an investment
decision, it may be wise to give it the same care.
Q. What is a "buyer's market"?
A. A buyer's market occurs when home sales are slow. Here are
some of the ways to determine if the home market in your area is a buyer's
market:
• Is it taking longer and longer to sell homes?
• Are foreclosures increasing?
• Are there large reductions in home prices?
• Has there been a decline in the number of building permits issued?
• Is unemployment increasing?
These factors indicate a "soft" market for home sales. A soft
market tends to make sellers
anxious and puts buyers in a stronger position than sellers. In a soft
market, buyers have many
homes to choose from and can demand special considerations from sellers.
Q. What is a "seller's market"?
A. The best time to sell your home is when homes are selling
fast, there are few homes on the
market, and the local economy is good. These are all characteristic of
a seller's market and operate to move home prices upward. Sellers can
and do demand high prices for their homes and often dictate the terms
of the contract. In a seller's market, sellers often receive several competing
offers and are in a position to sell quickly, perhaps in a matter of days
or weeks.
If you are a potential seller in a seller's market, you're well situated
to sell quickly and at
your price. On the other hand, if you're a potential buyer in a seller's
market, you'll want to be
particularly careful that you don't rush into a decision that you may
later regret. The best way to
avoid this situation is to do your homework to ensure that you know what
you want and what you can afford.
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